Reduction of the VAT rate in Ukraine

12.07.2012 Further deregulation of Ukraine’s Internal Revenue Code will lead to a conflict with the WTO, as reported by the State Taxation Service of Ukraine. However, the State Taxation Service offers to cut the rate of value added tax (VAT) for domestic trade transactions of up to 7%.
According to the draft reform the State Taxation Service offers not to raise income taxes, and reduce the VAT. Instead of a 20 percent rate will be charged 12% on the import of all kinds of goods and services in industries that are natural monopolies, and up to 7% - on internal operations. These different rates for imports and domestic products can lead to international conflict of Ukraine with the WTO.
Simultaneously with the reduction of the VAT rate will be canceled and all benefits to pay income tax and VAT, which currently do not pay with drugs, education services, and press cereal. In the near future the import of crude oil may also be exempt from VAT.
However, the liberalization leads to higher charges for the use of subsoil for the highly profitable and monopolistic industries: the rate on T-grade coal will rise to the level of coal grade A, and a tax on the extraction of iron ore will increase by 30 times.

Expert’s opinion

"How fancily arrange some of the laws of nature! Lomonosov formulated the mass conservation law in his day. And there is the law, which no one can deny up to date. But now there is one area of ​​nature, in which the mass (energy, moment, etc.) conservation law is broken very easy! As you guessed, this area of nature is state structure. More specifically it appears in the tax, budget area ​​ and in the sphere of existence of human communities. In the public sector in Ukraine you can reduce the value added tax (VAT) easy, but you can also impose an extra tax, which compensates for the loss. But there is interesting: while castling, the taxmen expect increase tax revenue! So, the business remains the same. The investments flow away from Ukraine. The number of entrepreneurs does not change. And the taxes collected in the same field will be more! And it is called - "the liberalization of tax laws"! Hats off! I remember the immortal proverb of newly drawn milk lovers: «If you want that your cow eats less, and gives more milk, you should feed it less and milk it more». Where from is so much energy in this "cow"? Surely "in the shadow of" grazing. Be careful. Shepherds are not asleep. Sales tax and VAT: there is the solution for the withdrawal of the Ukrainian economy out of the shadows. "

Lomakin Yaroslav ( Managing Partner of Honest & Bright Company Ltd)